Emails reveal how bank employing former PM tried to oil the wheels of a deal between Russian’s aluminium firm and the Libyan regime
by Robert Mendick
As he sat back on the private jet, reclining in his comfortable leather armchair, Tony Blair must have felt grateful to his benefactor and friend Colonel Muammar Gaddafi for such largesse. It made Mr Blair’s trip from Libya back to London altogether more civilised than the regular British Airways flight he would have otherwise had to take.
The Bombardier Challenger 300 jet, hired by the tyrant’s regime at a cost of £70,000, was used on at least two occasions by Mr Blair and his entourage to fly to Tripoli. Robert Mugabe, coincidentally, was offered the same jet by Gaddafi on one of his visits to Libya.
Inquiries by The Sunday Telegraph show that Mr Blair visited “The Leader” – as Mr Blair’s staff deferentially described Gaddafi in official correspondence – on six occasions between June 2007, when he quit Downing Street, and June last year.
But what Mr Blair was doing there on such a frequent basis remains something of a mystery.
His numerous websites fail to mention the trips at all. His spokesman declined to answer questions about the frequency of the visits and what was precisely discussed.
So what was Mr Blair up to and why all the secrecy? Email correspondence obtained by the anti-corruption campaign group Global Witness, and seen by this newspaper, shows that Mr Blair was linked to a multi-billion-dollar deal being set up in Libya by JP Morgan, the US investment bank.
Mr Blair is paid a reported £2 million a year as a senior adviser to the bank. Given his extensive contacts established during 10 years in Downing Street, he may be cheap at the price.
JP Morgan was trying to broker a deal between the Libyan Investment Authority (LIA), a £50 billion sovereign wealth fund, and Rusal, the world’s biggest aluminium producing company, founded by Oleg Deripaska, the Russian oligarch and friend of Lord Mandelson. There is no suggestion that Lord Mandelson, who at the time was business secretary, was in any way involved in the proposed deal.
Mr Deripaska is not only well-heeled – his fortune was estimated at its peak at £17 billion – but terribly well connected. His acquaintances have included the financier Nat Rothschild and, for a period at least, Saif Gaddafi, the dictator’s most influential son.
George Osborne was, along with Lord Mandelson, a guest on Mr Deripaska’s yacht in the summer of 2008 in Corfu. The lunch on the yacht led to a political storm over claims – vehemently denied – that Mr Osborne had attempted to solicit a £50,000 donation for the Conservative party.
Lord Mandelson, who first met Mr Deripaska in 2004, was also caught up in the fallout from the affair. At the time he was an EU trade commissioner who had authorised cuts in European aluminium import duties. Rusal was one of the main beneficiaries, although Lord Mandelson strongly denied any conflict of interest and said the change in tariffs had not been initiated by him.
At the time the JP Morgan emails were written, in December 2008 and March 2009, Rusal was in financial difficulties, mired in its attempts to restructure about £4.5 billion of debt owed to foreign banks.
If JP Morgan could put a deal together between the LIA and Rusal, then its fees would be huge. Documents seen by The Sunday Telegraph show Rusal was looking for a loan of around £3 billion in the form of a convertible bond, which would be converted into an equity stake in Rusal at a later date.
One source said the LIA was looking at providing a loan of about £1.3 billion. Had the convertible bond deal gone ahead – it later floundered for reasons JP Morgan refuses to go into – the bank could have netted fees of between £25 million and £50 million.
The first of the emails obtained by Global Witness was sent on Dec 28, 2008, from JP Morgan to Mustafa Zarti, the then vice-chairman of the LIA.
Mr Zarti, 41, was one of Libya’s most powerful money men and — this is no coincidence — a close friend of Saif Gaddafi, whom he met when the pair were studying in Vienna.
Written by Lord Renwick, JP Morgan’s vice-chairman and a former British ambassador to the US, the email states: “Dear Mr Zarti, On behalf of JP Morgan, we would like to invite you to London in the week beginning 12 January to finalise the terms of the mandate concerning Rusal before Mr Blair’s visit to Tripoli which is scheduled to take place on around 22 January.
“I will look forward very much to meeting you and to introducing you to the members of the JP Morgan team and we would of course like to host a dinner for you while you are here.
“Could you very kindly let me know what date might be convenient for you to visit London? With best wishes Robin Renwick.”
Lord Renwick, incidentally, was made a Labour peer by Mr Blair in 1997, although he now sits in the House of Lords as a cross-bencher.
Mr Blair subsequently visited Col Gaddafi on Jan 22. No details of the discussions between the two men appear in public records.
The meeting merited a mention by the Qatar News Agency. Its report declared that the pair had discussed a “host of international issues” but gave no further details. Last week, JP Morgan said Mr Blair had no knowledge of the deal that the bank was trying to set up between the LIA and Rusal.
Two months later, JP Morgan was still involved with the LIA and Rusal.
In a second email obtained by Global Witness, which was sent on March 11, 2009, to Mr Zarti, Lord Renwick enclosed details of the convertible bond deal that Rusal was hoping to put together.
Lord Renwick wrote that a “number of clarifications are still needed and they [Rusal] are still finalising their proposal. When they have done so, we will pass this on to you with our analysis of it, so that you can then decided [sic] whether you would wish to pursue the matter.”
Lord Renwick concluded: “Meanwhile, we very much appreciate our co-operation with you on other issues.”
It is not clear what those other issues were or whether Mr Blair had any involvement in them.
A month later, on April 7, Mr Blair’s private office wrote to the British embassy outlining another planned visit to Tripoli. In the email, Mr Blair’s office noted that he hoped to meet not only Gaddafi but senior figures in the LIA including Mr Zarti. Mr Blair met Gaddafi on April 30; it is not known if the meeting with Mr Zarti went ahead.
In September 2009, nine months after Lord Renwick’s first known email to Mr Zarti, it was reported that talks between LIA and Rusal had broken down. “It [Rusal] had been in active discussions with the Libyans about selling a 10 per cent stake in the Russian group,” said one report at the time.
A JP Morgan spokesman said: “JP Morgan declined to participate on such a transaction and thus Mr Blair was never involved, and it was never discussed with him.”
Although JP Morgan had dropped out of the deal, all was not lost for Rusal and the LIA. Perhaps JP Morgan’s services were no longer needed.
By the summer of 2009, Mr Deripaska and Saif Gaddafi, who had influence with the LIA, were said to be acquaintances. Mr Gaddafi hosted a 37th birthday party that year to which Mr Deripaska and Mr Rothschild were reportedly invited. Mr Deripaska, who has a £20 million home in Belgravia in London and speaks fluent English, instead floated Rusal on the Hong Kong stock market in January 2010 and the LIA bought $300 million worth of shares, the largest single purchase in the flotation. The flotation was a success and, with Rusal’s debt restructured, Mr Deripaska’s business was secure, although the LIA would lose $50 million in six months as Rusal’s share price dropped.
Mr Blair’s own business dealings remain opaque. He insists that he was not involved in, or even told about, the JP Morgan negotiations in Libya; in which case, it seems curious that the investment bank was dropping his name without his knowledge.
But then again, JP Morgan could be excused for cashing in on their best connected and most bankable asset.